A new research study by the Williams Institute at UCLA School of Law shows that allowing same-sex couples to enter civil unions in Delaware would increase business activity but would reduce net state revenue by a small amount, or less than $400,000 a year. Civil unions would equalize the tax paid by same-sex couples and increase public employee benefits spending. The state budget would gain from reduced public assistance spending, increases in spending and tourism tax revenue, and civil union license fees.
“Civil unions would provide Delaware’s same-sex unmarried couples with some much-needed legal protections at a minimal cost. The annual impact of providing civil unions is a hundredth of a percent of the State’s annual budget,” explains study co-author M. V. Lee Badgett, research director of the Williams Institute and professor of economics at the University of Massachusetts Amherst.
In calculating the net benefit to the State, the study predicts that 28 percent of Delaware’s 2,677 same-sex couples, or 750 couples will enter civil unions within three years after the legislation is passed.
Most of the impact to the state budget comes from decreasing the tax burden on same-sex couples and increase public employee benefits spending. “Introducing civil unions means same-sex couples will pay the same income taxes as different-sex couples. Since there is no marriage penalty in Delaware, the tax burden on same-sex couples will drop. The same result occurs with estate and transfer taxes,” explains study co-author, Craig Konnoth. “Furthermore, unlike many other states contemplating such laws, Delaware does not already provide benefits to the families of its employees in same-sex couples. Treating the families of same-sex couples equally therefore increases state spending on employee benefits.”
The impact is reduced by revenue gains in spending on ceremonies and public assistance savings. As study co-author Jody Herman notes, “Spending on civil union ceremonies will bring in nearly $650,000 in tax revenues over three years.” Moreover, the study notes, since a partner’s financial assets are taken into account when assessing eligibility for public assistance, the State’s public assistance expenditures will drop.
The Williams Institute for Sexual Orientation Law and Public Policy advances law and public policy through rigorous, independent research and scholarship, and disseminates its work through a variety of education programs and media to judges, legislators, lawyers, other policymakers and the public. This study can be accessed at the Williams Institute website, www.law.ucla.edu/williamsinstitute.